Leases

12 Months Ended

Dec. 31, 2019

The Company rents certain office facilities and equipment under noncancelable operating leases. Approximately 88,000 square feet of office space is utilized for the Company’s sales and recruiting offices, delivery centers, and corporate headquarters as of December 31, 2019. All of our leases are classified as operating leases. The average initial lease term is approximately five years. Several leases have an option to renew, at our sole discretion, for an additional term. Our present lease terms range from less than one year to 4.7 years with an average of two years. Leases with an initial term of twelve months or less are not recorded on the balance sheet.

The Company adopted ASU

No. 2016-02,

“Leases (Topic 842)” on January 1, 2019 using the additional transition method noted in ASU

2018-11.

The adoption of the new standard resulted in the Company recording a lease

right-of-use

asset and related lease liability of $5.7 million as of January 1, 2019. The cumulative effect of initially applying the new guidance had an immaterial impact on the opening balance of our retained earnings. The Company does not expect the guidance to have a material impact on its consolidated net earnings in future periods. The Company elected the package of practical expedients permitted under the transition guidance within the new standard, which allowed us to carry-forward the historical lease classification, among other things.

The following table summarizes the balance sheet classification of the lease asset and related lease liability:


	December 31, 2019
	( in thousands)
Assets:
Long-term operating lease right-of-use assets	$	4,617

Liabilities:
Short-term operating lease liability	$	1,396
Long-term operating lease liability		3,321

Total Liabilities\	$	4,717

Future minimum rental payments for office facilities and equipment under the Company’s noncancelable operating leases are as follows:


	Amount as of December 31, 2019
	( in thousands)
2020	$	1,615
2021		1,144
2022		1,118
2023		1,098
2024		288
Thereafter		—

Total	$	5,263
Less: Imputed interest		(546	)

Present value of operating lease liabilities	$	4,717

The weighted average discount rate used to calculate the present value of future lease payments was 5.4%.

We recognize rent expense for these leases on a straight-line basis over the lease term. Rental expense for the years ended December 31, 2019, 2018 and 2017, totaled $1.6 million, $1.4 million and $1.2 million, respectively.